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If you’re Charles Sousa, you drown your sorrows in small beer — by tinkering with The Beer Store and blowing smoke over contraband cigarettes.

Queen’s Park has a problem that would drive anyone to drink and smokes: Growth projections are sagging. Revenues are lagging.

That’s why Sousa’s promise, in Monday’s fall economic statement, to eliminate his $12.5 billion deficit by 2017 still looks like a stretch. His latest twist — raising $700 million from the underground economy by targeting contraband smokes — is classic smoke and mirrors, a budget perennial recycled by every treasurer in his hour of need and greed.

Targeting The Beer Store for more revenue has produced easy headlines — if not quite easy money — for a government drunk on spending. Ed Clark, the government’s privatization czar, proposed last week that the big foreign-owned brewers who run the retail monopoly should cough up a franchise fee based on their hidden profits.

Clark’s point is that The Beer Store runs a kind of minimalist monopoly — with low-end storefronts and consolidated warehousing that keeps distribution costs low, while retail prices are roughly comparable to other provinces. That gives the brewers a bigger, richer price spread in Ontario than anywhere else — which is why Queen’s Park wants a cut of those higher margins.

The Beer Store has reacted with predictable apoplexy, winding up its PR machine to warn drinkers against being hosed to satisfy the government’s insatiable thirst for beer money. Clark counters that it’s more like a windfall profits tax that targets excess revenues beyond a reasonable return on investment.

The problem, however, is that The Beer Store is not a regulated utility, nor a government-owned monopoly like the LCBO whose balance sheets are open for inspection. Bizarrely, our beer sales are controlled by three of the biggest foreign-owned brewers in the world — AB InBev, Molson Coors and Sapporo — who run their massive retail monopoly as a private preserve whose financial results are beyond the reach of government.

If The Beer Store wants to cry in its beer — by crying poor — it will have to open its books. And if it still doesn’t want to pay up, on the grounds that there is no money to spare — almost as if it’s running a charity — then the big brewers should cheerfully surrender their cozy little arrangement, Clark suggested mischievously.

They won’t, of course, because both sides know it’s a sweet deal. And both sides know each other very well — because the brewers keep a bevy of well-connected Liberals on staff (former campaign manager Don Guy also acts as a consultant). They continue lobbying intensively at the legislature, and recently held a beer-tasting reception well-attended by MPPs and cabinet ministers. The brewers are among the most generous donors at election time.

Queen’s Park is not asking for the moon — I’m told the government is looking for less than $100 million as an annual licensing fee. If The Beer Store pours cold water on the idea, the government is threatening to “blow up” their monopoly.

Despite the reflexive declarations of war, the brewers will soon sue for peace and the government will get its cut. But it’s not a happy ending, because it will merely perpetuate The Beer Store’s anachronistic and irredeemable retail monopoly.

It’s comforting for Sousa that the private profiteers who run our foreign-owned monopoly will provide a little extra cash for our impoverished treasury. It’s reassuring too that a big banker has called out the big brewers for their big profits. Yet it will mean absolutely no improvement to an ossified storefront operation that cries out for liberation and competition.

Ed Clark, who made his name at TD Bank by reinventing its retail operations, knows that better than most. But his mandate was restricted to raising more money for the government, not razing a crumbling edifice to the ground.

Raise a glass to The Beer Store’s sweet deal, which will endure as long as Liberals on both sides of the equation — in government and in the breweries — remain drinking buddies. It all adds up.

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